Pre-Retirees Can Correct Retirement Insecurities

Only 48% of U.S. pre-retirees (non-retired ages 55 to 70)
believe they will be able to live the lifestyle they wish in retirement,
according to LIMRA’s study, “The Pre-Retiree Market: Surveying the Landscape.”
The study found three in 10 pre-retirees have not started any basic retirement
planning. Looking at five retirement planning activities identified as critical
for retirement, no single activity had been accomplished by the majority of
pre-retirees surveyed.

“Pre-retirees are feeling insecure about their retirement
future, in part because they have not yet taken the steps to plan for
retirement,” said Matthew Drinkwater, LIMRA associate managing director of
Retirement Research. “Our research indicates that retirement preparedness is
strongly linked to the completion of key retirement planning activities like
determining your income and expenses, calculating your assets and how long they
will last, and identifying the things you want to do in retirement and how much
they will cost.”

Similar to other LIMRA studies, this one found those who
worked with advisers were twice as likely to have accomplished at least some
planning activities, particularly the more complex aspects of planning, such as
calculating future assets available in retirement and estimating how long those
assets will last.

Only 15% of all pre-retirees have a formal written
retirement plan. Even among pre-retiree households with higher incomes, just
about half have such plans in place. Meanwhile, 62% of pre-retirees
working with an adviser have written retirement plans.

“[O]ur research shows that working with an adviser to
plan for this major stage in life is not only wise but has measurable positive
results on retirement planning,” Drinkwater said.

When asked to identify which services offered by advisers
are most valuable, pre-retirees’ responses mirrored those of advisers surveyed
by LIMRA earlier this year. Both agree that creating an income plan and
minimizing the risk of running out of money are critically important.

These results also align with findings from LIMRA’s study of
recent deferred annuity buyers; the majority of recent deferred annuity buyers
said the two most important reasons they bought an annuity were to facilitate
retirement planning and to ensure their assets lasted throughout their and
their spouses’ retirements. (See “Individuals
Seek Guaranteed Income Outside Retirement Plans.”)

“The challenge for the retirement industry is to convince
more pre-retirees that sound planning truly can boost the likelihood that they
will live the lifestyles they have imagined. Some of these activities can be
difficult, but they are essential—and help is available,” Drinkwater concluded.